Inherent risk is the risk that financial statements are misstated before internal control is put in place. Inherent risk is caused by the nature of balance or transaction or the nature of the entity’s business. For example, inventories have a higher risk of being overstated.
Inherent risk and control risk are managed by management, therefore auditor can not control them, instead, he will just evaluate them before determining detection risk. If his auditor concludes that inherent and control risk is high, then he will accept lower detection risk, since he wants an overall audit risk to be low. On the other hand, if he evaluates inherent risk and control risk to be low then he may accept high detection risk.
The auditor is only in control of detection risk.
Therefore, detection risk is just a component of overall audit risk.
The all component of audit risk are interrelated since if the misstatement occur at the first place (inherent risk) and internal control fail to detect, correct or prevent it (control risk) and auditor fail to detect through performance of audit procedures (detection risk) then auditor will reach the wrong conclusion and hence issue inappropriate opinion (audit risk).